Just read the first chapters of Banerjee/Duflo and get the same impression! The part on migration is full of positive vibes. On trade the tone is so downbeat. On migration they cover papers with cool data and superb natural experiments. On trade... 1/9
On trade they focus on a theoretical model of the small gains from trade for the US. To think of it this might be because the leading migration literature is much “cooler” than the leading trade literature. 2/9
But there are plenty of cool stuff on trade and development they don’t mention, like the Suez canal closure as a natural experiment, the rise of East Asia via global value chains, the success of some export-oriented industrial strategies. 3/9
They cover the China shock that may have killed jobs in the US, but not how China got so rich and reduced poverty so much thanks to trade. Or how trade with China also actually created jobs in the US. 4/9
They argue trade liberalization led to increased inequality everywhere. But micro data from Brazil, Colombia, or Ethiopia suggest that the skill premium went down in the last 15 years. There’s rising inequality, especially at the very top, even in developing countries, but.. 5/9
... it’s unlikely this is due to Stolper-Samuelson effects, as many “unskilled” jobs were created in export industries and poverty was reduced. It’s more likely to be a Rosen effect, where large scale thx to tech and globalization leads to some winner-take-all millionaires. 6/9
They don’t talk about how trade policies like AGOA or the US-Vietnam FTA, sometimes work in boosting exports and in reducing poverty. 7/9
They talk about all the trust problems with online trade, without mentioning how amazon, ebay or Alibaba slash some trade frictions and connects remote places... 8/9
Maybe it's just that the trade literature is not promoting its more-applied research enough, so their view is more downbeat here. It’s a really good book though! 9/9
